Holdings: Principles of supply chain management

Principles of supply chain management:

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Bibliographic Details
Main Authors:	Crandall, Richard E. 1930- (Author), Crandall, William R. 1956- (Author), Chen, Charlie C. (Author)
Format:	Book
Language:	English
Published:	Boca Raton, FL [u.a.] CRC Press 2015
Edition:	2. ed.
Series:	Series on resource management
Subjects:	Business logistics Physical distribution of goods / Management Marketing channels / Management Supply Chain Management Internationales Management Logistik
Online Access:	Inhaltsverzeichnis
Physical Description:	XLIII, 673 S. Ill.
ISBN:	9781482212020

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adam_text	Contents Preface to the Second Edition............................................... xxix Preface to the First Edition..................................................xxxi Acknowledgments........................................................... xxxiii Authors.....................................................................xxxvii Introduction.................................................................xxxix Section I Overview of Supply Chain Management 1. Evolution of Supply Chains...................................................3 Learning Outcomes............................................................3 What Is a Supply Chain?......................................................6 Importance of SCM..........................................................7 Evolution of Supply Chains................................................. 9 Early Supply Chains........................................................9 Local Supply Chains........................................................9 Global Supply Chains.................................................... 10 Changing Government Orientation......................................... 13 State-Controlled Governments..............................................13 Market-Driven Governments.................................................13 Current Trends That Link Supply Chain Participants More Closely.............14 Relationship Building.....................................................14 Customer Relationship Management........................................14 Supplier Relationship Management........................................15 Product Life Cycle Management...........................................15 Electronic Business.......................................................15 Developing Economies......................................................16 Outsourcing...............................................................16 Need for Quality Improvement..............................................17 Changing Customer Demands.................................................18 Decreasing Response Time................................................18 Lean Supply Chains to Reduce Waste......................................18 Current Developments in SCM.................................................19 Power Has Shifted from Manufacturers to Retailers.........................19 Consolidation of Small, Local, or Regional Retailers into National Chains.20 Emergence of Killer Category Retailers..................................20 From a Make-and-Sell Mentality to a Sense-and-Respond Orientation.........20 Obstacles to Supply Chain Integration.......................................21 Need for Globalization....................................................22 Complexity of Arranging Entities with Common Interests....................22 Lack of Effective Interorganizational Systems ............................23 vii viii Contents Need for Multiple Supply Chains within Companies........................23 Lack of Trust between Participants......................................23 Examples of Companies with Successful Supply Chains.......................25 Summary...................................................................25 Discussion Questions......................................................28 References................................................................28 2. Supply Chains as a System................................................31 Learning Outcomes.........................................................31 Company Profile: Zara s...................................................31 Introduction..............................................................35 Supply Chain Systems......................................................37 Inputs..................................................................37 Transformation..........................................................38 Outputs.................................................................38 Manufacturing versus Services...........................................39 Characteristics of Supply Chains..........................................39 Physical Flow...........................................................40 Information Flow........................................................41 Funds Flow..............................................................42 Relational Flow.........................................................42 Examples of Supply Chains in Different Industries.........................43 Internal and External Customers...........................................45 Open Systems versus Closed Systems........................................46 Effect of External Influences on Supply Chains............................48 Obstacles and Enablers of Supply Chain Integration........................48 Obstacles...............................................................49 Enablers................................................................50 Performance Measurement...................................................50 Allocation of Costs, Resources, and Benefits along the Supply Chain.......53 Value Creation as the Ultimate Objective..................................54 Summary...................................................................56 Hot Topic.................................................................56 Discussion Questions......................................................59 References................................................................59 Section II Demand Perspective 3. Determining Customer Needs...............................................63 Learning Outcomes.........................................................63 Company Profile: McDonald s...............................................63 Introduction..............................................................67 Group Customers into Homogeneous Segments.................................68 Determine Needs of the Ultimate Consumer..................................69 Product Needs...........................................................70 Service Needs...........................................................70 Marketing Mix...........................................................70 Manufacturing and Service Supply Chains.................................71 Contents ix Accurately Determine Customer Needs..........................................72 Approaches................................................................72 Market Research...........................................................73 Open System Scanning......................................................74 Competition.............................................................74 Technology......................................................... .74 Economy.................................................................75 Government..............................................................76 Social Trends.......................................................... 76 Business Environment....................................................77 Develop Reliable Demand Forecasts............................................78 Quantitative Forecasting Methods..........................................78 Simple Moving Average...................................................79 Weighted Moving Average.................................................80 Exponential Smoothing...................................................81 Exponential Smoothing with Trend Adjustment.............................81 Seasonal Factor Forecasting.............................................81 Regression Analysis.....................................................82 Qualitative Forecasting Methods...........................................83 Survey Method...........................................................83 Delphi Method...........................................................83 Collaborative Forecasting.................................................84 Determine the Attributes of a Well-Designed Product..........................84 Functionality (Product Works to Satisfy Customers Needs).................84 Validity (Product Has Value and Functions at a Reasonable Cost)...........84 Manufacturability (Product Can Be Efficiently Produced)...................85 Reliability (Product Has a Variety of Quality Attributes).................85 Serviceability (Product Can Be Serviced during Its Effective Life)........85 Recyclability (Product Can Be Recycled along the Reverse Logistics Supply Chain)... 86 Consider Alternative Product Design Approaches...............................86 Quality Function Deployment...............................................87 Concurrent Engineering....................................................87 Design for Manufacturability..............................................88 Design for Sustainability.................................................88 Determine the Number of Supply Chains Needed by a Company....................89 Align with Customer Segment...............................................89 Align with Product/Service Bundle........................................ 90 Align with Supplier Category..............................................91 Align with Common Incentives..............................................91 Respond to Needs of Internal Customers.......................................92 Conclusion.................................................................. 92 Hot Topic: Human Trafficking.................................................93 Discussion Questions........................................................ 94 References...................................................................95 4. A System to Meet Customer Needs..............................................97 Learning Outcomes.......................................................... 97 Company Profile: GE Aviation.................................................97 Supply Chain Models.........................................................101 Global Supply Chain Forum Model.............................................102 X Contents Customer Relationship Management..........................................104 Origins of CRM..........................................................104 What Can CRM Do?........................................................105 Benefits................................................................105 CRM Processes...........................................................106 Problems................................................................107 CRM s Future............................................................108 Product Life Cycle Management.............................................109 What Is PLM?............................................................109 How Did PLM Evolve?.....................................................110 What Does PLM Include?..................................................110 What Does PLM Not Include?..............................................Ill What Are the Benefits of PLM?...........................................Ill What Are the Obstacles?.................................................112 What Is the Present Status of PLM?......................................113 What Does the Future Hold?..............................................114 Supply Chain Configuration................................................115 Basic (Generic) Supply Chain............................................115 Variations for Different Industries.....................................116 Supply Chain Mapping....................................................116 Determining Resource Requirements.........................................116 Facilities..............................................................116 Equipment...............................................................119 Employees...............................................................120 Inventory...............................................................120 Information Systems.....................................................120 Designing Processes to Match with Products................................121 Make to Stock...........................................................122 Assemble to Order.......................................................122 Make to Order...........................................................122 Engineer to Order.......................................................122 Determining the Mix of Make and Buy.......................................123 Core Competency Concept.................................................123 Total Cost of Ownership.................................................123 Cost Reduction versus Revenue Increase Considerations...................124 Effect of Outsourcing Movement..........................................124 Aligning Entities along the Supply Chain..................................125 Entities to Be Involved.................................................126 Allocation of Authority and Responsibility among Entities...............126 Collaboration Process...................................................126 Implementation Plan.....................................................127 Evaluating the System Design..............................................127 Will It Accomplish Its Objectives?......................................128 Is It Sustainable?......................................................128 Is It Flexible?.........................................................129 Summary...................................................................129 Hot Topic: Sweatshops.....................................................130 Discussion Questions......................................................132 References................................................................133 Contents i 5. Demand Management......................................................137 Learning Outcomes.......................................................137 Company Profile: NextEra................................................137 Introduction............................................................143 Definition of Demand Management.........................................144 Importance of Demand Management.........................................146 Managing Demand.........................................................146 Accept All Demand....................................................147 Select the Types of Demand to Accept.................................147 Solicit External Input in Forming Demand Patterns....................147 Design the Form in Which Demand Will Be Accepted.....................147 Impose Constraints on Demand Submission..............................148 Managing Supply.........................................................148 Select a Demand Management Strategy..................................148 Develop a Demand-Forecasting System..................................148 Determine the Resource Requirements to Meet the Demand...............149 Merging Supply and Demand into a Demand Management Process..............149 Sales and Operations Planning to Match Short-Term Supply and Demand..149 Collaboration among Supply Chain Participants........................150 Demand Management in Manufacturing......................................151 Demand Management in Services...........................................152 Proposed Demand Management Strategies...................................154 Factors That Affect Selection of a Demand Management Strategy...........155 Resources Value.....................................................155 Type of Demand.......................................................157 Top Management Strategies............................................157 Relationship between Factors and Strategies.............................158 Model for Integrating Demand and Supply Management......................160 Programs Used to Implement Demand Management Strategies.................164 Provide Strategy Programs............................................164 Match Strategy Programs..............................................165 Influence Strategy Programs..........................................165 Control Strategy Programs............................................166 Demand Management along the Supply Chain................................166 Retail...............................................................167 Wholesale............................................................167 Manufacturer.........................................................167 Mining and Agriculture...............................................167 Summary.................................................................167 Discussion Questions....................................................170 References..............................................................170 Section III Supply Perspective—Distribution, Production, Procurement, and Logistics 6. Distribution and Retailing.............................................175 Learning Outcomes.......................................................175 Company Profile: Lowe s.................................................175 xii Contents Introduction................................................................179 Retail Function.............................................................180 History of Retailing........................................................180 Characteristics of the Industry.............................................184 Customers and Markets.....................................................184 Outputs...................................................................186 Inputs....................................................................186 Transformation Process....................................................187 Impact on Operations Management...........................................188 Designing the Retail Process................................................188 Strategic Orientation................................................... 189 Critical Design Points: Keys to Success...................................190 Additional Factors to Consider in Retail Store Design.....................193 Multidiscipline Project................................................193 Continuing Need to Readjust or Redesign................................193 E-Commerce Considerations (Direct vs. Indirect Selling)................193 Strategic or Long-Term Considerations..................................194 Managing a Retail Business..................................................194 Determine the Expected Demand.............................................194 Plan Capacity to Meet Demand..............................................195 Implement the Operating Plan..............................................195 Measure Performance......................................................196 Replan for the Next Period................................................196 Retail and Inventory Management.............................................196 Value.....................................................................196 Availability..............................................................197 Variety...................................................................197 Presentation..............................................................197 Service...................................................................197 Response Time.............................................................197 Present Situation in Retailing..............................................197 Future in Retailing.........................................................198 Role of Wholesalers and Distribution Centers................................199 Ordering..................................................................199 Receiving.................................................................199 Stocking..................................................................199 Picking...................................................................200 Loading the Trucks........................................................200 Transporting to Stores....................................................200 Unloading and Display at Stores...........................................200 Critical Success Factors for Distribution...................................201 Inventory within Distribution Functions.....................................201 Inventory Management between Retailer and Distributor..................... 202 Technology in Distribution Functions........................................202 At the Retail Store.......................................................202 Movement of Goods.........................................................203 At the Distribution Center................................................203 Distribution Center Design..................................................203 Positioning Services within the Distribution Functions......................204 Contents xiii Presale Services..........................................................204 Postsale Services.........................................................204 Role of Third-Party Service Providers.....................................205 Distribution Performance Measurement........................................205 Financial Performance Measures............................................205 Operating Performance Measures............................................205 Collaboration Performance Measures........................................205 Retailer-Distributor Relationship...........................................206 Summary.....................................................................206 Hot Topic: Contaminated Milk................................................207 Discussion Questions........................................................209 References..................................................................210 7. Production and Service Processes...........................................211 Learning Outcomes...........................................................211 Company Profile: Caterpillar................................................211 Introduction................................................................216 Evolution of the Production Function........................................218 From Craft to Mass Production.............................................219 From Mass Production to Mass Customization................................219 Critical Success Factors for Manufacturers..................................220 Cost and Efficiency..................................................... 220 Quality...................................................................220 Responsiveness: Timing of Delivery........................................220 Responsiveness: Product/Service Mix.......................................221 Flexibility............................................................221 Agility...................................................................221 Information Technology....................................................221 Manufacturing Strategies....................................................221 Make to Stock.............................................................222 Locate to Order...........................................................222 Assemble to Order.........................................................223 Make to Order.............................................................223 Engineer to Order.........................................................223 Batch to Lean Operations....................................................223 Present Batch Flow........................................................224 Machine Breakdowns.....................................................225 Supplier Failures......................................................225 Worker Flexibility................................................... 225 Customer Lead Times....................................................225 Customer Order Size....................................................226 Proposed Lean Production Flow.............................................226 Customer Lead Time.....................................................226 Extra Available Space..................................................227 Faster Detection of Quality Problems...................................227 Ease of Transferring Operators.........................................227 Reduced Scheduling Requirements........................................227 Smaller Lot Sizes......................................................227 xiv Contents No Buildup of WIP Inventory........................................228 Empowered Employees................................................228 Reduced Equipment Breakdowns.......................................228 Reduced Late Material Deliveries...................................228 Reduced Write-Off of Inventory.....................................228 Obstacles to Implementing Lean........................................228 Make or Buy Strategies..................................................229 Vertical Integration..................................................229 Outsourcing...........................................................230 Capacity Planning.......................................................232 How Much Capacity? When? What Kind?...................................232 Location and Ownership................................................233 Service Production Strategies...........................................233 Relationships with Downstream Customers.................................234 From Transactions to Processes..........................................236 Transactions versus Processes.........................................236 Basic Processes of a Business.........................................237 Benefits of a Process Orientation.....................................238 Effect of Process Orientation...........................................238 Organizational Structure..............................................238 Strategies............................................................239 Knowledge Management..................................................239 Change Management.....................................................240 Trends in Production....................................................240 From Manual to Automated..............................................240 From Domestic to Global...............................................241 From Standard Products to Customized..................................241 Postponement..........................................................241 Sales and Operations Planning.........................................242 Additive Manufacturing................................................242 Performance Measurement.................................................242 As Measured by Accounting.............................................242 As Measured by Production.............................................243 Measures along the Supply Chain.......................................243 Summary.................................................................243 Hot Topic: Clothing Manufacturing.......................................244 Discussion Questions....................................................246 References..............................................................247 8. Procurement/Purchasing..................................................249 Learning Outcomes.......................................................249 Company Profile: Nestle.................................................249 Introduction............................................................254 Role of Procurement in the Supply Chain.................................255 Traditional Purchasing..................................................256 Contemporary Purchasing.................................................258 Changing Role of Purchasing.............................................259 Critical Success Factors for Purchasing.................................261 Functionality.........................................................261 Contents xv Availability.............................................................261 Cost.....................................................................261 Quality..................................................................262 Match Inflow with Outflow................................................262 Reduce Variances in Delivery.............................................262 Increase Supplier Dependability..........................................263 Reduce the Bullwhip Effect...............................................263 Become an Intercompany Facilitator.......................................263 Find Sustainable Suppliers...............................................263 Purchasing Functions: Participating........................................264 Product Design...........................................................264 Product Specifications................................................. 264 New Product Introduction.................................................264 Target Costing...........................................................266 Strategic Sourcing...................................................... 267 Supplier Location........................................................268 Inventory Management................................................... 268 Supplier Risk Management.................................................269 Purchasing Functions: Directing............................................269 Purchasing Process.......................................................269 Supplier Evaluation......................................................270 Supplier Relationship Management.........................................271 Supply Chain Coordination/Collaboration..................................271 Purchasing along the Supply Chain..........................................271 Consumer.................................................................271 Retail...................................................................272 Wholesale................................................................272 Manufacturer.............................................................273 Mining and Agriculture...................................................273 Services.................................................................273 Offshore Outsourcing.......................................................274 As a Strategic Concept...................................................274 TCO Considerations.......................................................275 As a Project, with Project Management Needs..............................277 Other Considerations: Intangible Costs and Public Acceptance.............277 Supplier Location as a Strategy for Entering an Offshore Market..........278 Performance Measurement....................................................278 Traditional: Positive Purchase Price Variance.......................... 278 Contemporary: Enhanced Value for the Consumer............................278 Future of Purchasing........................................................279 Summary....................................................................280 Hot Topic: Apple Juice.....................................................281 Discussion Questions.......................................................283 References.................................................................283 9. Logistics: The Glue That Holds the Supply Chain Together.....................287 Learning Outcomes............................................................287 Company Profile: Transportation Insight......................................287 XVI Contents Scope of Logistics...........................................................293 Evolution of Integrated Logistics............................................295 Transportation...............................................................297 Truck: Privately Owned or Third-Party Carriers............................298 Rail: For Selected Goods..................................................298 Waterways.................................................................299 Air.......................................................................299 Pipeline..................................................................299 Parcel....................................................................299 Transmission Lines........................................................299 Fiber-Optic Cable Networks................................................300 Materials Management.........................................................300 Interim Storage..............................................................300 Exchange Points..............................................................301 Traceability.................................................................301 Integration..................................................................301 Outsourcing..................................................................302 Drivers of the Outsourcing Movement.......................................303 Sustainability..........................................................304 Social Responsibility...................................................304 Ethical Responsibility..................................................304 Future Company Well-Being...............................................304 Steps in the Outsourcing Decision.........................................304 Step 1. Determine Project Feasibility...................................304 Step 2. Prepare a Project Plan..........................................305 Step 3. Estimate Annual Savings.........................................306 Step 4. Identify Risks or Disruption Costs..............................306 Step 5. Estimate the Return on Invested Capital.........................307 Step 6. Implement the Offshore Outsourcing Program......................307 Step 7. Measure Progress................................................307 Step 8. Review and Revise...............................................308 Summary.................................................................308 Reshoring Initiative.........................................................308 Rise of 3PLs.................................................................309 Benefits of 3PL Services..................................................312 Reduces Total Cost......................................................312 Decreases Total Time from Origin to Destination.........................312 Results in More Consistent Processing: Less Variability in Elapsed Time.312 Allows Individual Participants to Concentrate on Core Functions.........313 Increases Flexibility of the Supply Chain...............................313 Leads to Market Development through 3PL Contacts........................313 Taps into Specialized Knowledge Not Normally Internal to Company........313 Obstacles to Successful Implementation....................................313 Lack of Qualified Personnel within the Company to Manage the 3PLs.......313 Lack of Full-Service Providers..........................................314 Perceived Loss of Control by Outsourcing Company........................314 Difficulty in Coordinating Disparate Participants.......................314 Lack of a Comprehensive Financial Analysis before Implementing..........314 Difficulty in Selecting and Using Appropriate Performance Measures......314 Contents xvi Trend toward Outsourcing the Distribution Function..........................315 Major Companies.............................................................315 Role of 4PL in Building Supply Chain Relationships..........................315 High-Tech Industry Issues......................................................316 Risk Management................................................................317 Status Report..................................................................317 Hot Topic......................................................................319 Discussion Questions...........................................................321 References.....................................................................321 10. Reverse Supply Chains..........................................................325 Learning Outcomes..............................................................325 Company Profile: GENCO.........................................................325 Introduction...................................................................329 Description of Reverse Supply Chain Networks...................................329 Benefits of Reverse Logistics...............................................330 Barriers to Reverse Logistics...............................................331 Continuation of Forward Supply Chains.......................................331 History of Reverse Logistics...................................................333 Principal Drivers of the Movement..............................................333 Individual Consumers........................................................333 Individual Businesses.......................................................335 Society as a Group..........................................................335 Environmental Concerns....................................................335 Resource Scarcity Concerns................................................336 Business Sector.............................................................336 Economic Benefits Possible................................................336 New Businesses, Even New Industries, Possible.............................337 Educational Institutions....................................................337 Governments: At All Levels..................................................337 Activities in Reverse Logistics................................................338 Service: Assure Proper Use of Product.......................................338 Returns: Repackaging or Relocation..........................................338 Restoration: Minor Modification or Repair...................................338 Remanufacturing: Overhaul and Major Rebuilding..............................339 Recycling: Reconstitution as Part of Another Product........................339 Disposal: Return to Natural State...........................................339 Hazardous Waste Disposal....................................................340 Role of Private Industry.......................................................340 New Paradigms in Product Design (Design for Sustainability).................341 Design and Operate Green Supply Chains......................................341 Develop Systems to Manage Reverse Logistics.................................341 Participate in Joint Ventures to Seek Social Objectives.....................342 Role of Government.............................................................342 Research: To Identify Threats and Opportunities........................... 342 Legislation: To Standardize Business Requirements...........................344 Regulation: To Monitor Performance..........................................345 Participation: To Encourage and Support Ongoing Programs....................345 Role of Consumer...............................................................345 XV111 Contents Participant in Reverse Supply Chain Programs...........................346 Educated Consumer......................................................346 Supporter of Green Supply Chain Efforts................................346 Reverse Logistics Network................................................347 Continuation of the Forward Supply Chain...............................347 Open System Environment................................................348 Heavily Outsourced by Major Businesses.................................348 Need for a Life Cycle Systems Approach...................................349 Need for IT..............................................................351 Other Considerations in Designing Reverse Supply Chains................ 352 Future...................................................................352 Growth in Amount of Materials Recycled.................................352 Increase in Number of Companies Performing Reverse Logistics Activities.353 Joint Ventures between Private Business and Government.................353 Increased Emphasis on Prevention, Not Just Reusing.....................353 More Companies Will Design Integrated Reverse Logistics Systems........353 Summary..................................................................353 Discussion Questions.....................................................356 References...............................................................357 Section IV Need for Integration 11. The Need to Integrate....................................................361 Expected Outcomes........................................................361 Company Profile: Cisco...................................................361 Introduction.............................................................367 Setting the Stage........................................................368 Reasons to Integrate...................................................369 Research in Support of Integration Efforts.............................370 From Mass Production to Mass Customization...............................372 From Craft to Mass Production..........................................372 Prelude to Mass Customization..........................................373 From Vertical Integration to Virtual Integration.........................375 From Homogeneous Cultures to Diverse Cultures............................377 From Bottom Line to Triple Bottom Line...................................377 Drivers of Change........................................................379 Global Competition.....................................................379 Global Markets.........................................................380 Economic Advantage................................................... 380 Lower Costs..........................................................380 Higher Revenues......................................................381 Relationships and Trust among Supply Chain Participants..................381 Trust between Individuals..............................................381 Formal Contracts or Agreements.........................................381 Common Interests or Projects (Enforced Trust)..........................381 Involves Change Management...............................................382 Change Is Difficult within a Company...................................382 Embedded Culture.....................................................382 Contents xix Policies and Procedures.................................................383 Organization Structure..................................................383 Customer Relationships..................................................383 Supplier Relationships..................................................383 Union Relationships.....................................................384 Change Is More Difficult for a Community...................................384 Company-Community Relationship..........................................384 Difficulty in Changing Laws and Regulations.............................385 Difficulty in Changing Infrastructure...................................385 Change Is Most Difficult for an Entire Country.............................385 Political Implications..................................................385 Regional Differences....................................................385 Steps in the Integration Process.............................................386 Build Interfaces with Customers and Suppliers..............................386 Change Interfaces to Interlaces to Make the Relationships Closer...........386 Change Interlaces to Integrated Relationships..............................386 Need for Strategic Planning..................................................386 Categories of Operations.....................................................387 Normal Operations..........................................................387 Improvement Programs.......................................................388 Problem-Solving Programs...................................................388 Crisis Management.................................................. 388 Need for a Multiyear Project Plan............................................388 Performance Measurement across the Supply Chain..............................389 Integration Requires Sharing.................................................389 Summary......................................................................389 Hot Topic: AECL, Part 1......................................................390 Discussion Questions........................................................ 392 References...................................................................393 12. Why Integration Is Difficult.................................................395 Learning Outcomes............................................................395 Company Profile: Boeing.....................................................395 Introduction.................................................................400 Determining Strategic Objectives.............................................401 Evaluating the Potential Return on Investment................................401 Uncertainty of Benefits....................................................401 Tangible or Direct......................................................402 Intangible or Indirect................................................ 402 Uncertainty of Costs.......................................................402 Product Costs...........................................................402 Support (Overhead) Costs................................................403 Uncertainty of Assets Employed.............................................403 Designing for Participant Differences........................................403 Participants Are Not Equal.................................................403 Commitment..............................................................403 Contribution............................................................404 Different Roles: Drivers and Followers..................................404 XX Contents Technical Differences....................................................404 Size...................................................................404 Proximity..............................................................405 Type of Operation......................................................405 Need for Multiple Supply Chains.............................................405 Different Customer Segments..............................................406 Different Supplier Segments..............................................406 Different Logistics Networks.............................................407 Separating Interwoven Networks...........................................408 Selecting and Implementing Technology.......................................408 Product and Service Processes............................................408 Remove Barriers........................................................408 Eliminate Redundancy...................................................408 Develop Compatible Processes...........................................409 Strive for Effectiveness and Efficiency................................409 Incomplete Interorganizational Systems...................................409 Lack of Systems Compatibility..........................................409 Lack of Information....................................................410 Lack of a System................................................... 410 Financial Funds Flow.....................................................410 Realigning Infrastructure...................................................411 Internal Organization....................................................411 Effect of Outsourcing Movement......................................... 412 External Organization.................................................. 412 Policies and Procedures..................................................412 Physical Infrastructure..................................................413 Transforming Company Cultures...............................................413 Internal.................................................................413 External.................................................................413 Building Relationships......................................................414 Communicate..............................................................414 Coordinate...............................................................414 Cooperate....................................................,...........414 Collaborate..............................................................414 Lack of Trust Inhibits Collaboration........................................415 Measuring Performance.......................................................418 Maintaining the System.................................................... 419 During the Implementation Process........................................419 During the Operation of the Supply Chain.................................419 Extension into Reverse Logistics.........................................420 Obstacles to International SCM..............................................420 Summary.....................................................................420 Discussion Questions........................................................424 References..................................................................424 13. How to Build an Integrated Supply Chain.....................................427 Learning Outcomes...........................................................427 Introduction................................................................432 Contents xxi Who Manages the Supply Chain?..............................................433 Past and Future of Supply Chain Management.................................433 Present Supply Chains......................................................434 Virtual Supply Chains....................................................435 Contractual Alliances....................................................435 Dominant Party Management................................................435 Third-Party Direct Management............................................436 Third-Party Indirect (Third-Party) Management............................436 World of Lean Production...................................................437 Product..................................................................438 Purchasing Process.......................................................438 Production Process.......................................................439 Delivery Process.........................................................439 Demand Variation.........................................................439 Moving from Functional Focus to Cross-Enterprise Collaboration.............439 Comprehensive Supply Chain Model...........................................441 Decisions Needed to Achieve a Lean and Agile Supply Chain..................443 Commitment...............................................................443 Concept..................................................................443 Configuration............................................................444 Top Management........................................................444 Marketing.............................................................444 Purchasing............................................................445 Manufacturing.........................................................446 Distribution..........................................................446 Finance and Accounting................................................446 Communication.........................................................447 Culture...............................................................447 Customization............................................................448 Integrated Supply Chain....................................................449 Coordination.............................................................450 Cooperation..............................................................450 Collaboration............................................................450 Steps in the Change Process................................................456 Investigate..............................................................456 Involve..................................................................456 Include..................................................................456 Initiate.................................................................456 Invigorate...............................................................456 Implement................................................................456 Integrate................................................................457 Institutionalize.........................................................457 Innovate.................................................................457 A Look Ahead...............................................................457 Complexity...............................................................458 Clairvoyance.............................................................459 Summary....................................................................460 Discussion Questions.......................................................462 References.................................................................463 xxii Contents Section V Financial and Information Technology Perspectives 14. Information Flow along the Supply Chain...................................467 Learning Outcomes.........................................................467 Company Profile...........................................................467 Introduction..............................................................478 Need for Information Flow.................................................478 Types of Information Transmitted..........................................480 Upstream Suppliers......................................................480 Midstream (Internal).................................................. 481 Downstream Customers....................................................481 Reverse Supply Chain....................................................482 Supply Chain Connectivity...............................................482 Intracompany Technologies Used............................................484 Data Capture and Communication..........................................484 Computer-Aided Design.................................................484 Point-of-Sale Terminals...............................................485 Automatic Identification Systems......................................485 Groupware.............................................................486 Data Storage and Retrieval..............................................486 Data Manipulation and Reporting.........................................487 Supply Chain Direct Links.................................................488 Customer Relationship Management...................................... 488 Supplier Relationship Management........................................489 Linking Technologies......................................................489 Interorganizational Systems.............................................489 EDI and Internet EDI....................................................489 Linking Applications......................................................490 Videoconferencing.......................................................490 Sales and Operations Planning...........................................492 Product Life Cycle Management...........................................492 Third-Party Services......................................................492 Service-Oriented Architecture...........................................492 Software as a Service...................................................493 Cloud Computing.........................................................494 Benefits of Information Technologies......................................495 Tangible Benefits.......................................................495 Increase Revenues.....................................................495 Reduce Product Costs................................................ 496 Reduce Transaction Costs..............................................496 Reduce Product Development Lead Time................................ 496 Reduce Capital Investment Costs.......................................496 Intangible Benefits.....................................................496 Improve Customer Relations............................................497 Improve Decision Making...............................................497 Streamline Administrative Processes...................................497 Integrate Company Planning and Execution..............................497 Contents XXlll Barriers to IT Adoption.....................................................498 Technological Obstacles..................................................498 Standards Interoperability.............................................498 Back-End Interoperability..............................................498 Scope of Applications..................................................498 Security...............................................................499 Managerial Obstacles................................................... 499 Power Structure........................................................499 Trust..................................................................500 Economic Issues........................................................500 Employee Acceptance....................................................500 Societal Obstacles.......................................................500 Model of an Integrated Supply Chain Information System......................501 Summary.....................................................................502 Hot Topic...................................................................502 Discussion Questions........................................................505 References..................................................................505 15. Funds Flow along the Supply Chain...........................................509 Learning Outcomes...........................................................509 Company Profile: Wells Fargo................................................509 Overview of the Flow of Funds...............................................514 Need for Cash Flow within a Company.........................................515 Supply Chain Funds Flow.....................................................516 Flows in a Supply Chain..................................................516 Benefits of Improved Funds Flow..........................................517 Obstacles................................................................517 External Sources of Funds...................................................518 Banks and Other Lending Institutions.....................................518 Supply Chain Finance.....................................................519 Performance Measurement.....................................................520 Financial Accounting Measures: Current Ratio.............................520 Management Accounting Measures...........................................520 Need for Finance and Operations to Collaborate..............................522 Effect of Production Strategies on Funds Flow...............................522 Effect of Outsourcing on Product Costs and Capital Requirements.............523 Inter organizational Systems................................................524 Benefits.................................................................525 Obstacles................................................................525 Evolution................................................................526 Future...................................................................526 EDI.........................................................................527 Benefits.................................................................528 Funds Flow in the Reverse Supply Chain......................................529 Comprehensive Example.......................................................529 Components of a Financial Statement......................................529 Analyzing the Cash Flow Statement........................................530 Looking at Alternatives..................................................532 XXIV Contents Summary....................................................................534 Hot Topic: Boeing 787 Dreamliner...........................................534 Discussion Questions.......................................................536 References.................................................................537 16. ROI for Supply Chains and Other Issues.....................................539 Learning Outcomes..........................................................539 Company Profile: Apple.....................................................540 Supply Chain Configurations................................................547 Programs Requiring Close Supply Chain Relationships........................548 Need to Evaluate Supply Chain ROI..........................................548 Tangible Benefits...................................................... 548 Reduced Inventory.....................................................549 Reduced Cycle Times...................................................549 Improved Customer Service.............................................549 Improved Quality......................................................549 Tangible Costs......................................................... 549 Communications........................................................549 Retraining Internal Employees........................................ 550 Restructure Supplier Network........................................ 550 Design Customer Network...............................................550 Capital Investment....................................................550 Indirect Costs......................................................... 550 Meetings Required to Organize Customer and Supplier Relationships.....551 Programs to Change Internal Culture...................................551 Changes in Organization Structure.....................................551 Realignment of Roles of Supply Chain Participants.....................551 Intangible Benefits......................................................552 Integrated Flow of Goods and Services.................................552 Faster Resolution of Problems.........................................552 Match Customer Wants with Products Provided...........................552 Reduced Excess Capacity along the Supply Chain........................552 Increased Knowledge...................................................553 Reduced Risk of Supply Chain Disruption...............................553 Intangible Costs.........................................................553 Loss of Confidential Information......................................553 Increased Awareness of Inequitable Treatment among Participants.......554 Discrepancy between Contribution and Payoff among Participants........554 Legal Actions.........................................................554 Obstacles to Equitable Distribution among Members...................... 554 How to Organize?.........................................................554 How to Distribute?.......................................................555 Supply Chain Governance Models.............................................555 Prime Mover in the Supply Chain............................................556 Organize.................................................................556 Select the Team..........................................................557 Monitor Ongoing Operations...............................................558 Evaluate Performance.....................................................558 Initiate Change..........................................................558 Contents XXV Third-Party Provider.......................................................559 Changes in Supply Chain Composition........................................559 Dictated by Prime Mover..................................................560 Consensus of the Supply Chain Participants...............................560 Consultation with an Outside Adviser.....................................560 Mediation by Third Party.................................................560 Legal Action.............................................................560 Case Studies...............................................................560 Use of Accounting Records................................................561 RFID Implementation......................................................561 Cost Reductions with Investment Requirements.............................561 Supply Chain Finance.....................................................562 Benefits of Supply Chain Collaboration...................................562 Summary....................................................................563 Hot Topic..................................................................563 Discussion Questions.......................................................565 References.................................................................566 Section VI The Future 17. Trends in Supply Chain Management.......................................... 569 Learning Outcomes...........................................................569 Company Profile: Amazon.....................................................569 From the Past to the Present................................................577 From the American Revolution to World War II..............................577 From World War II until the Present.......................................578 Evolution of Critical Success Factors in the United States..................579 Beginning (from First Settlements through 1800)...........................581 Industrial Revolution (1840s-1890s).......................................581 Growth and Recovery (1890s-1930s).........................................581 Mass Production (1940s-1950s).............................................581 Arisings (1960s-1970s).................................................. .582 Awakening (1980s).........................................................582 Globalization I (1990s)...................................................582 Globalization II and Mass Customization (2000 and after)..................582 Major Drivers of Change in Supply Chains....................................583 Global Business Perspective.................................................584 Balanced Approach to Offshore Outsourcing................................. 584 Total Cost of Ownership...................................................585 Risk Management...........................................................585 Other Issues..............................................................586 Continuing Advances in Technology...........................................586 Retail Operations....................................................... 586 Demand Forecasting........................................................587 Transportation and Distribution...........................................587 Information Systems.......................................................587 From Special-Purpose to General-Purpose Resources.........................588 XXVI Contents Evolution from Transactions to Processes..................................589 Transactions versus Processes...........................................589 Benefits of a Process Orientation.......................................590 Vanishing Boundaries between Manufacturing and Services...................590 Infrastructure Refinements................................................591 From Vertical to Horizontal Organizations...............................591 From Rigid Rules to Flexible Policies and Procedures...................592 From Tacit Knowledge to Implicit Knowledge..............................592 From Financial Accounting to Management Accounting......................593 Culture and Employees.....................................................593 From Passive or Obstructing Culture to Engaged and Receptive Culture...593 Employees: From Specialized to Empowered................................594 Supply Chain Relationships................................................595 From Adversarial to Collaborative.......................................595 Trust and Distrust......................................................596 Emergence of Third-Party Supply Chain Coordinators........................597 Risk Management....................................................... 598 Increased Complexity and Risk...........................................598 Internal Risks..........................................................600 External (Open System Environment) Influences...........................601 Natural Disasters.......................................................601 Sustainability............................................................602 Triple Bottom Line......................................................603 Beyond the Triple Bottom Line......................................... 604 Why Should Business Take the Lead?......................................604 Need for Alliances......................................................604 Benefits and Obstacles..................................................605 Sustainability in the Future............................................605 Strategic Employee Plan...................................................605 Summary...................................................................606 Hot Topic.................................................................606 Discussion Questions......................................................609 References................................................................609 18. Preparation for the Future................................................613 Learning Outcomes.........................................................613 Company Profile...........................................................613 Recognize the Need to Adapt...............................................620 Globalization...........................................................620 Competition....................................................... 620 Economy.................................................................621 Technology..............................................................621 Customers...............................................................621 Employees...............................................................622 Develop New Measures of Success...........................................622 Financial Success.......................................................622 Social Responsibility................................................. 623 Environment.............................................................623 Integrating Financial Results, Society Equity, and Sustainability.......624 Contents xxvii Identify What Needs to Be Done.............................................624 APICS E R Foundation Inc.................................................624 McKinsey Study...........................................................626 University of Tennessee..................................................627 Adapt to Government Actions................................................627 Environment..............................................................627 Business Ethics..........................................................628 Product Safety...........................................................628 Social Equity............................................................629 Infrastructure...........................................................629 Capitalize on Third-Party Skills...........................................629 Direct Support: Outsourcing..............................................629 Indirect Support: Financing and Insurance................................630 Advisory: Consulting and Training........................................630 Analyst: Measure Performance and Identify Needs..........................630 Manager: Virtual Holding Company.........................................630 Utilize Information Technology.............................................630 Enterprise Resource Planning Extension...................................631 Service-Oriented Architecture............................................631 Internet Processes.......................................................631 Interorganizational Systems..............................................632 Take Advantage of Other Technologies.......................................632 Organization and Teams...................................................632 Project Management.......................................................632 Process Technology.......................................................633 Build Strategic and Operational Plans......................................633 Continue the Drive for Collaboration.......................................633 Develop Performance Measures for Supply Chain Management...................634 Integrate Delivery Effectiveness Measures................................634 Integrate Cost and Quality Measures......................................635 Supplier Profitability...................................................635 Effectiveness of Supply Chain Integration................................635 Structure the Organization to Manage Change................................636 Purchasing...............................................................636 Integrate All Functions..................................................637 Educate the Work Force...................................................637 Increase Marketing Influence.............................................638 Overcome Inertia.........................................................638 Expand Knowledge Management................................................639 From Data to Information.................................................640 From Information to Knowledge............................................640 From Knowledge to Wisdom.................................................641 Some Ways to Learn.......................................................642 Obstacles to Knowledge Transfer..........................................642 Will Knowledge Replace Things ?.........................................643 Acquire Data Analytics Capabilities........................................644 Background...............................................................645 Benefits.................................................................645 Obstacles................................................................646 XXV111 Contents Applications...........................................................647 Techniques.............................................................647 Conclusions............................................................648 Integrate Manufacturing and Services.....................................649 Apply Chaos Theory to Business...........................................650 Summary..................................................................651 Hot Topic................................................................651 Questions for Discussion............................................... 653 Discussion Questions.....................................................653 References...............................................................654 Index 657
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spellingShingle	Crandall, Richard E. 1930- Crandall, William R. 1956- Chen, Charlie C. Principles of supply chain management Business logistics Physical distribution of goods / Management Marketing channels / Management Supply Chain Management (DE-588)4684051-5 gnd Internationales Management (DE-588)4114040-0 gnd Logistik (DE-588)4036210-3 gnd
subject_GND	(DE-588)4684051-5 (DE-588)4114040-0 (DE-588)4036210-3
title	Principles of supply chain management
title_auth	Principles of supply chain management
title_exact_search	Principles of supply chain management
title_full	Principles of supply chain management Richard E. Crandall ; William R. Crandall ; Charlie C. Chen
title_fullStr	Principles of supply chain management Richard E. Crandall ; William R. Crandall ; Charlie C. Chen
title_full_unstemmed	Principles of supply chain management Richard E. Crandall ; William R. Crandall ; Charlie C. Chen
title_short	Principles of supply chain management
title_sort	principles of supply chain management
topic	Business logistics Physical distribution of goods / Management Marketing channels / Management Supply Chain Management (DE-588)4684051-5 gnd Internationales Management (DE-588)4114040-0 gnd Logistik (DE-588)4036210-3 gnd
topic_facet	Business logistics Physical distribution of goods / Management Marketing channels / Management Supply Chain Management Internationales Management Logistik
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work_keys_str_mv	AT crandallricharde principlesofsupplychainmanagement AT crandallwilliamr principlesofsupplychainmanagement AT chencharliec principlesofsupplychainmanagement

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